But Iran has responded in kind. The closure of navigation in the Strait of Hormuz — through which nearly one-fifth of the global trade in oil and liquefied natural gas (LNG) passes — transforms a direct military exchange into a global risk event. With traffic halted, shipping capacity has contracted, war-risk insurance premiums have spiked, and energy markets have been adjusting accordingly.
As the US-Israeli war with Iran escalates, the infrastructure and transit routes that sustain global energy flows are increasingly drawing fire, rattling financial markets. But the biggest risk is not necessarily a sustained loss of the physical supply of oil. It is that the tightly integrated energy system on which almost every country relies could experience a massive financial and geopolitical shock.
The spark was the US-Israeli strike on Iran’s main oil terminal on Kharg Island, the launch point for almost all of the country’s crude exports. With around 10% of Iran’s GDP coming straight from oil, hitting this single hub is more than a tactical move; it strikes at the regime’s main source of foreign currency and fiscal stability.
